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A special needs trust is typically created by an attorney, and it manages assets for the benefit of a person with special needs. The trust holds ownership of money or property that’s left to the beneficiary. A third-party trustee oversees the account and decides how the recipient can access and spend the assets. Attorneys frequently design a special needs trust as part of the estate planning process. Here’s what to know about these unique financial and legal arrangements.

Benefits

This type of trust allows you to leave money or property to a disabled loved one without jeopardizing their Supplemental Security Income (SSI) or Medicaid benefits. Since SSI and Medicaid base eligibility requirements on the financial circumstances of the recipient, an applicant with an inheritance or property can be denied their much-needed benefits. Fortunately, a special needs trust keeps your gift separate from their personal assets. Another advantage is that you’ll know that your disabled loved one will have the financial resources they need after you’re gone.

What They Include

attorneyA special needs trust should clarify that the assets held are for supplemental and additional care beyond what the state already provides. It should also say that it isn’t a standard trust or one designed to provide basic support.

Types

A third-party trust is the most common, and this entails a person setting up the trust to care for a loved one after their death. A first-party trust is best suited to a disabled individual who inherits a large amount of money outright or obtains a substantial settlement in a court case—they establish this type of trust in their own name. A pooled trust is managed by a nonprofit foundation that pools the money of various contributors and invests it for the benefit of the trust beneficiaries.

 

If you’re in Hawaii and want assistance with planning and preparing a special needs trust, contact the Law Office of Dawn N. Murata LLLC. With over 20 years of experience, Attorney Murata serves clients throughout Oahu and Kauai, helping people of all income levels and ages get their affairs in order. Call (808) 245-4572 to schedule a consultation, or visit her office's website to view her other services.

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